The Key Benefits of Investing in Multifamily Real Estate

Investing in multifamily real estate is familiar because, in most cases, you have experienced the process of buying, maintaining, and selling a home. Becoming part of a multifamily investment syndication comes with several benefits not always found in other investments.

Passive Income: Most real estate opportunities require active investing. You must dedicate time to locate a profitable property, secure the purchase, manage the asset, and sell it for a profit. Syndications are passive investments that do not require your time beyond the initial due diligence.

Grow Long-term Wealth: Aside from flipping homes, real estate requires a long-term view. Hold periods for multifamily syndications tend to range from four to seven years. You receive a share of the profits from rental income, increased operational efficiency, and appreciation.

While economic conditions vary across regions, metro areas with above-average population and job growth typically see strong returns even during recessionary times. Annual rent increases and property appreciation tend to exceed inflation, building long-term wealth.

Cash Flow: Apartment buildings collect monthly rent from tenants providing steady cash flow. In some cases, reinvesting profits for property upgrades delay payouts in the first year of ownership. However, the reward is higher rents and faster appreciation. Multifamily syndications tend to pay monthly or quarterly dividends throughout the hold period.

Stability: Unlike daily stock market fluctuations, real estate is less volatile. National or world news, consumer sentiment, or a change in company dynamics drastically affect stock prices, which can move as much as 3% from day to day. In a bear market, declines can exceed 50%.

Real estate tends to move in slower intervals and by fewer percentage points. Property is a physical asset that holds intrinsic value stabilizing property prices. Declines tend to come from population shifts and supply, making the location a major factor in the overall cost and how well it holds up during economic downturns.

Tax Benefits: The IRS does not place mortgage deduction limits on investment property, and the syndication can accelerate depreciation through cost segregation to reduce taxable income. Sometimes, you can use a 1031 exchange at the exit to defer taxes by reinvesting in another property or syndication.

Final Thoughts

Investing in multifamily syndications can serve as a hedge against inflation while building long-term wealth and providing monthly or quarterly cash flow. Working with an experienced investment team, like Sunage Equity Capital, can further reduce risks because we understand the economic factors to consider as we enter challenging economic times over the next few years.

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